Jensen Huang’s exit tests whether Nvidia can run without its co-founder
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Jensen Huang’s resignation from Nvidia has shaken up not only his company but also the booming artificial intelligence industry, which was largely built around his success and leadership.
In a regulatory filing on Thursday, Nvidia said Chief Financial Officer Colette Kress will serve as interim CEO while keeping her finance role until a permanent successor is named. Harvey C. Jones was appointed the board’s first-ever chair. Huang, who owns about 3.6% of Nvidia, will also leave the board.
Huang’s resignation follows reports of two extramarital affairs, including one with Alice Huang, a Singapore-based businesswoman whom U.S. intelligence officials reportedly suspect of working for Chinese intelligence. Nvidia’s board launched an independent investigation into national-security concerns raised by the reports. Since his resignation, Reuters reported that Huang had intimate relationships with a second Nvidia employee.
Representatives of Nvidia and Huang did not respond to a request for comment.
Nvidia’s stock dropped more than 11% in pre-market trading on Thursday and closed at $166.19, down more than 4%. Shares have fallen 13% since Friday.
Nvidia is facing a major test as revelations surface that he had an affair with a suspected Chinese spy.
“Jensen’s contributions to NVIDIA are profound,” the company said in its statement. “NVIDIA is one of the most consequential technology companies in the world. The Board and the company thank Jensen for his immeasurable contributions to the company and the industry.”
Huang has been a key player in the growth of the AI industry and his ouster sparked worries about the effects it would have on Santa Clara-based Nvidia and other companies that depend on its computer chips.
The revelations have also highlighted national security concerns in Washington, where federal lawmakers have called for an investigation into accusations that China targeted the powerful tech mogul. The U.S. has been locked in an AI race with China, raising more scrutiny over Nvidia’s business with the country.
Congressional Republicans have called on Huang himself to provide an update, warning the incident raised ‘significant national security concerns.’
“It’s absolutely stunning news,” said Brian Colello, a senior equity analyst at Morningstar. “It was not something that was on the minds of investors a week ago or prior.”
Executive scandals are hardly rare, Colello said, but “not to somebody at his scale, not to somebody who helms a company the size of Nvidia” and “who is at the epicenter of such a transformative technology as AI.”
Huang was deeply embedded in the company’s operations. He had 60 direct reports, and both of his children work at Nvidia. Colello said Nvidia appeared to have done little succession planning, given how much of the company’s leadership and decision-making centered on Huang.
“The market hates uncertainty, and there’s far more uncertainty about Nvidia now than there was a week ago,” Colello said.
Global equity research firm Bernstein SocGen Group downgraded its rating on Nvidia’s stock and lowered its price target from $400 to $200, saying “there will no doubt be more allegations to come.”
Building a colossus
Huang co-founded Nvidia and led it to an unprecedented rise, making it the world’s most valuable company for some time and the first ever to reach a $5-trillion market capitalization last year.
While Nvidia’s powerful chips were first popular for gaming and cryptocurrency mining, they became the core component in building AI. Huang and his signature black leather jacket became the technology’s public face.
As other tech leaders have called for a slowdown of the AI race, Huang has called for faster AI innovation, saying it could help improve safety.
Huang is seen as a visionary, dealmaker and politically savvy, forging strong ties with President Trump, who suggested former Apple Chief Executive Tim Cook take over Huang’s role in a Truth Social post.
Some Silicon Valley tech leaders have shown support for Huang. When reports started to swirl that Nvidia’s board of directors was preparing to oust Huang, SpaceX Chief Executive Elon Musk said in an X post that it would be “an honor” to hire Huang.
In an interview with Bloomberg this year, Huang said he would prefer his transition out of the role to happen two decades from now.
“This is a company that was synonymous with Huang,” said Patrick R. Riccards, a crisis communications expert. “He was the company. He was the face, but he was also the heart and soul of this company.”
Riccards, who has consulted for Fortune 500 companies and presidential administrations, said the tech industry has grown increasingly volatile, with persistent layoffs and restructuring creating a “wild west.” Nvidia, which has not had any major recent layoffs, was the exception.
“It was the stable unicorn,” Riccards said.
That stability is facing its first test with the ousting of Huang, who was, up until now, the only CEO Nvidia employees have known.
“Those employees were ready to slay dragons with a butter knife for him,” Riccards said.
Absence of a succession plan
Such larger-than-life leaders can unintentionally become a liability, governance experts say.
Michael Useem, a professor at the University of Pennsylvania’s Wharton School of Business, said there is no evidence the company invested in preparing a successor, and that the board shares responsibility if it didn’t press the issue.
“It looks like they’re making up for lost time,” Useem said.
Rene Haas, the chief executive of chip design company Arm Holdings, who worked at Nvidia from 2006 to 2013, told the New York Times that Huang was resistant to establishing a formal succession plan because “he felt it would create competition among executives and be divisive.” Nvidia has been working with an outside firm to identify potential replacements for Huang, according to Bloomberg.
“You can fault the board for not understanding what was going to be needed in the long term,” Useem said, “on the valid premise that nobody lives forever.”
The race in shareholder lawsuits against Nvidia has since commenced. A class-action shareholder lawsuit was filed Monday in federal court in San Francisco against Nvidia and Huang.
Still, Nvidia’s GPUs and software ecosystem underpin much of the AI industry, which makes the company hard to replace, Morningstar’s Colello said, even as the largest tech companies try to reduce their reliance on it.
“AI is still running on Nvidia gear today,” Colello said.
The larger risk, he said, is to customer relationships.
“Nvidia will have to work hard and work quickly to solidify any customer relationships that might be damaged.”
Jeffrey Sonnenfeld, a senior associate dean at the Yale School of Management, said he does not expect Nvidia’s business to shrink, though he said the turmoil could create opportunities for other semiconductor companies, including AMD, Texas Instruments and Analog Devices.
While some commentators predicted a market crash Thursday morning, Sonnenfeld said there have been bright spots in the market.
“This is giving opportunity for a lot of others,” he said.
Huang’s exit also hit the “neocloud” companies, the newer AI data center operators that rent out computing power, according to Steven Tian, research director at the Yale Chief Executive Leadership Institute.
Those companies were already under strain, Tian said. They must raise large amounts of debt to build data centers, and rising interest rates make that harder. Huang’s departure could add to those pressures, he said, contributing to Thursday’s selloff in neocloud shares.
The turmoil could benefit hyperscalers, including Amazon, Microsoft and Google, which have their own large-scale cloud infrastructure businesses, Tian added.
Investors will get their first look at the new leadership soon. Nvidia will report third-quarter fiscal 2027 results Tuesday as previously scheduled, followed by an earnings call.
Lawmakers have requested for Huang to appear for a closed-door congressional briefing the day after.
